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Gap In 2020 Home Buyer Activity Starting To Close? |
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![]() Welcome to June! It seems that the pace of home buying activity might (??) be starting to pick back up again during June...
Give it a few more weeks to know for sure, but it seems that slightly more buying (and selling) is happening as we have started rolling through June. | |
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Harrisonburg Area Home Sales Slow In May |
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![]() A bit later this week I'll take a full look at our local housing market and publish my full market report. Before I get to that, though, I thought I'd take a quick peek at the pace of sales in May. As you can see above...
Stay tuned for further analysis of our local housing market, but yes, home sales did slow down quite a bit in May. | |
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At Start of Phase Two the Pace of 2020 Contract Signing Is Still Slowing |
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![]() Welcome to Phase 2 in Virginia, folks! :-) Here's a quick summary of what is changing...
So, how about it, home sellers -- are you ready to put your homes on the market? I am confident we'll have very few 50+ person showings... ;-) As shown above, the pace of home buying (contract signing) has slowed over the past month.
I have theorized for a few weeks now that this slow down in buyer activity is a result of fewer sellers being ready to sell as opposed to fewer buyers being willing or able to buy. If that is the case, will this new phase mean more sellers will sell and thus more buyers will buy and thus that we'll see the 2020 trajectory start to catch back up with 2019? Maybe. We'll wait and watch and see together. Happy Friday! | |
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High End Home Sales (Incredibly) Strong In 2019 |
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![]() High end home sales (over $600K per this analysis) have been quite strong over the past five years. To put it into context...
Also of interest is if we look at an even higher price point... ![]() The graph above shows home sales over $750K and as is evident, we usually see only 1 or 2 home sales per year in this price range -- but in 2015 that surged to 8 home sales, and last year it surged again, up to 10 home sales! I suppose it is also important to note that these price ranges are a small portion of our local housing market. In 2019...
Thus far in 2020, this high end segment of the market (over $600K) seems to be performing similarly to 2019 -- though the $750K+ market seems to be returning to normal level after an extraordinarily strong 2019. | |
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The Drop Off In Real Estate Activity Has Not Been Drastic |
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![]() In talking to my dad yesterday, he reflected that it seemed like the drop off in real estate activity had not been drastic. I agreed. We have seen somewhat of a decline in real estate activity (buyers buying, sellers selling) but it has not been nearly as significant as I thought it would be a few months ago when COVID-19 started having more of an impact on our daily lives. I've been taking a look at cumulative buyer activity each week for the past month or so to see how local market dynamics are changing. As shown above...
So, yes, buyer activity has dropped off a bit in 2020 - but it has not been drastic. | |
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Homes Have Never Sold Faster Than They Are Selling Right Now! |
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![]() OK, admittedly, I was only able to look back 20 years -- but still -- I think it is fair to say that... Homes Have Never Sold Faster Than They Are Selling Right Now! As you can see after the real estate boom of 2003 to 2006, the time it took for homes to sell (median days on market) got to be as high as four (plus) months and stayed there between 2008 and 2011. Since that time, homes have been selling faster and faster -- largely due to the demand for housing increasing steadily and the supply of homes declining steadily. In 2018, the median days on market dropped below one month -- and it has continued to decline in 2019 and 2020. The current "17 days" in 2020 means that half of the homes that sell in Harrisonburg and Rockingham County are under contract within 17 days of being listed for sale -- and the other half of the homes that sell take longer than 17 days. It is certainly a fast paced world we live in these days! Buyers have to be ready to move quickly when a new listing of interest hits the market! | |
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Monthly Housing Costs Decline A Bit In 2020 Thanks To Record Low Mortgage Interest Rates |
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![]() The monthly cost of a mortgage on a median priced house has actually declined a bit this year! For this analysis, I am measuring "monthly housing cost" by determining the mortgage payment amount (principal, interest, taxes and insurance) for a median priced home in Harrisonburg and Rockingham County, if a buyer were financing 80% of the purchase price and paying Harrisonburg real estate taxes. Over the past year...
So, even though prices are higher now than over the past two years, the monthly housing cost for financing 80% of the purchase of a median priced home has actually declined. | |
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Home Buyers Keep On Buying |
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![]() You almost have to squint to see major differences between the trajectory of each of these lines over the past few years. The three lines above are showing the cumulative number of buyers signing contracts at any given point in the year. Looking back to the middle of March, just when we were starting to see effects of COVID-19 on our daily lives, the pace of contract activity in 2020 was ahead of the past two years... Jan 1, 2020 - Mar 15, 2020 = 265 contracts Jan 1, 2019 - Mar 15, 2019 = 242 contracts Thus, as of March 15, buyers were 9.5% ahead of last year's pace. Now, two thirds of the way through May, things have flipped flopped... Jan 1, 2020 - May 20, 2020 = 536 contracts Jan 1, 2019 - May 20, 2019 = 565 contracts Thus, as of May 20, buyers are 5% behind last year's pace. So... 1. Home buyer activity has slowed in 2020 over the past two months. 2. Home buying activity in 2020 is only 5% behind last year! I expect we'll see things start to speed back up at some point -- but it hasn't seemed to have started yet... | |
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Inventory Changes Can Reveal Reasons For Fewer Home Sales |
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![]() Contract activity is slowing, a bit, and that will likely eventually lead to fewer sales -- that is to say fewer sales in 2020-YTD than in 2019-YTD. So, if we get to that point, perhaps in July 2020, what shall we conclude about the state of our local housing market if we're seeing fewer home sales this year than last? After all, we have been seeing relatively steady increases in the number of homes sales for almost 10 years now! I think inventory trends (at such a future date) will help reveal the reason for fewer home sales. If fewer home sales are accompanied by rising inventory levels... that will indicate that more sellers want to sell their homes than there are buyers who want to buy homes. That will mean that the market is softening and it will become less of a seller's market than in the past. If fewer home sales are accompanied by steady or declining inventory levels... that will indicate that fewer sellers want to sell their homes and the buyers are still there wanting to buy homes. That will mean that the market is staying strong with sustained buyer interest despite an interruption in the flow of sellers willing to sell. So -- fewer home sales could mean two very different things -- and thus far, it's seeming that it's the second scenario -- fewer sellers willing to sell despite a consistent pool of buyers ready to buy. | |
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Home Sales and Prices Still Rising Despite Declining Contract Activity |
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![]() I just published my monthly market report, which you can download as a PDF here, or read on for the highlights of what is happening these days in our local housing market. But first, check out the details of the house shown above, located adjacent to the JMU campus, by visiting 80MaplehurstAvenue.com. Now, let's dive into the housing data and see what we can learn about the latest trends in the Harrisonburg real estate market... ![]() As you can see above, the pace of home sales dropped off a good bit in April 2020 (see #1) as there were only 91 closed sales as compared to 112 last April. This is not altogether surprising, as we had seen contract activity starting to decline slightly in March. The year-to-date pace of sales (see #2) is actually still quite a bit higher (8.36%) this year as compared to last year. There was a surge of home sales in January 2020 which has kept us ahead of last year when it comes to year-to-date sales despite slower sales in April. The median sales price is still on the rise (see #3) over the past year -- having risen from $214,900 a year ago to $229,250 at the end of April. Homes are selling faster and faster and faster (see #4) with a 33% decline over the past year in the median days on market. And now, let's look at how sales have bounced all over the place thus far in 2020... ![]() If you're feeling dizzy in 2020 trying to keep track of how the housing market is doing, you're not alone...
So, yeah - the net effect is still an increase between 2019 and 2020 - but that might shift when we include May home sales. We are likely to see fewer than 130 home sales in May based on contract activity in April. Only time will tell whether these short term interruptions of long term trends will impact those long term trends, as shown below... ![]() As you can see (in green) the median sales price has been steadily rising over the past year (quite a bit longer actually) to the current median sales price of $229,250. So far, we're not seeing any indications that we'll see a flattening or decline in market values in this area. Over the past year, we have seen an increase (even if choppy) in the pace of home sales, but that dropped a bit in April 2020, and might drop a bit more in May 2020. I think this is mostly related to fewer sellers being willing to sell which is resulting in fewer buyers being able to buy. It's also helpful to look at values over time just for single family homes, as the townhouse/condo market often includes investors which doesn't show owner occupant buying activity as clearly... ![]() The figures above are showing the median sales price of detached homes over the past six plus years. The median sales price has risen between 2% and 7% for each of the past five years, and seems to be ready to increase again in 2020, perhaps by around 3%. Part of the reason that prices are going up is because we're seeing steady buyer demand amidst fewer and fewer options of homes for sale at any given moment... ![]() Above, we're looking at the number of buyers buying in a six month period -- which has been relatively steady over the past few years -- as compared to the number of homes on the market at any given time. The buyers are consistently ready to buy -- but they're fighting over fewer and fewer homes for sale. All that has made this an increasingly strong seller's market over the past few years. That said, buyer activity has faded a big over the past two months... ![]() Last year, April was the strongest month of buyer activity for the entire year -- this year, not so much. We've seen an increase each month this year in the number of buyers buying -- but it has only resulted in a total of 440 contracts, as compared to a slightly higher pace of 466 contracts last year. So, slightly fewer buyers have contracted to buy in 2020, which will eventually result in a slower year-to-date sales figure, though that hasn't shown up yet. And why are fewer buyers buying, you might ask? I think the largest factor is fewer sellers being willing to sell... ![]() As shown above, we have seen a 13% decline in the number of homes for sale over the past year. Last year, the number of homes for sale rose to around 270 homes and stayed around that number between March and October. This year, it is not clear that we'll see inventory levels get that high. Those buyers that are able to buy, though, are financing their home purchase at a historically low mortgage interest rate... ![]() The mortgage interest rate at the end of April was 3.23%, which is the lowest on record -- ever. If you are buying in today's market, and are able to secure a contract on a house in this low inventory environment, you are certain to be pleased with your mortgage interest rate. OK, well, I'll leave it at that for now. You can review all of the trends and graphs by downloading a PDF of my market report here, or follow my blog at HarrisonburgHousingToday.com where I'll continue to monitor trends in our local market. In summary, the local housing market continues to see more homes selling, faster, at higher prices - but a small slow down in seller (and thus buyer) activity over the past two months will likely start to translate into slightly slower pace of sales, even if prices are not affected. Until next month, stay healthy, stay sane, and be in touch if I can be of any help to you or your family - with real estate or otherwise. | |
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Home Buying Activity Continues To Slowly Slow, But Low Inventory Likely A Contributing Factor |
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![]() The pace of buyers signing contracts to purchase homes continues to slowly slow in 2020 -- with year-to-date contract activity in 2020 now 7% lower than during the same timeframe in 2019. A few contextual notes...
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Home Buyer Activity Still Slowing, Slowly, in 2020 |
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![]() Are home buyers contracting to buy homes as quickly as we would have expected them to be in 2020? No. Has the pace of home buying activity dropped drastically given the current public health situation? No. As shown above, home buyer activity (this year is the red line) continues to trail off a bit as compared to the past two years.
The timing of contracts is different every year, so if we average out the past two years we see a pace of 485 contracts through May 7th. Thus, this year's pace of buying activity is only 4% slower than the average of the past two years. So... Is COVID-19 affecting the pace of home buying (and selling) activity in our local market? Yes. Is it still relatively likely that this year's total number of home sales will be within 5% - 10% of last year? Yes. Stay tuned for further analysis as we progress through this unusual time. | |
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More Home Buyers Purchase In The County Than The City |
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![]() Each year, right around twice as many home buyers purchase homes in Rockingham County as compared to in the City of Harrisonburg. That said, the home buyers in the City are much more densely situated -- since the City is comprised of only 17.42 square miles -- while the County spans 849.09 square miles! As a random aside, Rockingham County is the third largest county in Virginia! Not necessarily, as there are more than THREE as many homes for sale in the County as compared to the City. ![]() Where will you purchase your next home? In the City or the County? Why? Based on the lot size, privacy, school district, age, property type? | |
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Always Look At The Larger Context When Considering House Price As A Buyer Or Seller |
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![]() THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $400K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $350K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $360K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. The Main Takeaway As a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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Contract Activity Slows In April 2020 But Perhaps Mostly Because April 2019 Was A Wild Month? |
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![]() Contract activity declined 27% in April 2020 -- there were 157 contracts signed last April, and only 115 signed this April. Perhaps this is not surprising given the impact of COVID-19 -- or -- perhaps April 2019 was just a crazy month of contract activity and is not a great month to use for a comparison. When comparing April 2020 (115 contracts) to April 2018 (124 contracts) there was only a 7% decline in contract activity last month. Only time will tell whether this (fewer contracts) is a lasting trend -- but below you'll see how the year has shaped up thus far... ![]() As you can see, the 439 contracts thus far in 2020 is 5% lower than in 2019, but 3% higher than in 2018. So, let's keep on moving along and see what May will reveal! | |
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Sold Price Per Square Foot On The Rise In 2020 |
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![]() In addition to watching how the median sales price changes over time, it can be quite insightful to see how the median price per square foot of sold homes changes over time. The graph above tracks the median price per square foot of single family homes (not townhouses, duplexes or condos) in Harrisonburg and Rockingham County over the past 19 years. Price per square foot fell 22% between 2006 and 2011 as the market cooled back off. Since that time, however, we have seen a slow and steady increase in this metric -- from $101/SF in 2011 to $129/SF last year -- which marks a 28% increase over the past eight years. I wouldn't necessarily expect that we would see drastic increases in this metric in the next few years, but an increasing number of buyers (more demand) and significantly fewer sellers (less supply) does make you wonder if we will start to see more rapid increases in sales prices, and thus in price per square foot. Thus far in 2020, we are seeing a 6% increase in the sold price per square foot in Harrisonburg and Rockingham County! ALSO OF NOTE -- this metric is most helpful in understanding value trends over time -- not in calculating the value of one particular property. This median price per square foot is the mid point of many very different homes -- new homes, old homes, homes with garages, homes without garages, homes with basements, homes without basements, homes with acreage, homes on small lots, etc. A median price per square foot can be more helpful in understanding the potential value (or value range) of a single property if we pull that median value based on a smaller data set of more properties more similar to the single property. | |
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YTD Home Buying Activity Slows Slightly in 2020 |
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![]() This is my first weekly check-in with contract activity where we're seeing a slight decline in contract activity in 2020 as compared to 2019. The data...
So, slightly fewer buyers have contracted on homes this year (to date) as compared to last year (to date). Is it significant? No, at least not at this point. There has been a 2.8% decline in buyer activity in 2020 -- which is a relatively small decline given how much of our daily lives has temporarily changed due to COVID-19. Happy Friday, and I'll check in on this metric again about a week from now. | |
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Despite Everything Going On, We Are Still Seeing Slightly, Barely, More Home Buyers in 2020 |
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![]() We're now about a month into dealing with the impact of COVID-19 on our lives, society, work, employment, finances, and yes, housing market. As shown above, despite everything that is going on, there have still been more buyers signing contracts thus far in 2020 (379 of them) than we saw either of the past two years (376, 355). That said, the gap is shrinking, and it seems likely that cumulative buyer activity in 2020 might (?) fall behind 2019 at some point in the next few weeks. I'll continue to track this data from week to week to see how COVID-19 is or is not impacting the amount of home buying activity we are seeing in our current market. The same two notes apply from last week...
If you have questions about how all of this relates to your plans for potentially buying or selling a home, feel free to reach out by sending me an email - scott@hhtdy.com. | |
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Harrisonburg Area Housing Market Still Strong Through End Of March 2020 |
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![]() I'm working from home today, as is the norm for many of us these days. I hope that you and your family are in good health and good spirits as we travel through these unprecedented times. Before we get going, here are two articles I wrote a few weeks ago that are still quite applicable given the current scenario with COVID-19... What follows is an update on our local (Harrisonburg and Rockingham County) real estate market as measured by home sales data through the end of March 2020. Overall, you'll see that almost all indicators are still quite positive in our local market. If we are going to see an impact of COVID-19 on our local housing market, we might first see signs of that another month or two from now. Before we dive in, take a few minutes to learn more about this month's featured home - an upscale home in the Blue Stone Hills area - by visiting 2221PearlLane.com. Also, for those that like to cut to the chase, here's a PDF of my entire market report. Now, onto some data, and what we might conclude that it means... ![]() As shown above...
So, we have been seeing a relatively strong and robust market through the end of March! It gets even more interesting when examined visually... ![]() This year has certainly been quite a yo-yo when it comes to sales per month. We saw a record breaking number of sales in January (higher than the prior three months of January) and then a depressingly low number of sales in February (lower than the prior three months of February) and then things bounced right back up again in March to the highest month of March sales seen in the last few years. I suppose it's not totally unreasonable to think we could see another yo-yo move in April if home sales dip back down somewhat due to COVID-19. Read on a bit more for data on contract activity in March. ![]() Looking at the data visually, again, you'll note that we saw the strongest first quarter of home sales in quite a few years in 2020. If this trend continues we would likely see 1,350+ home sales this year. ![]() Looking now at contract data (above) you'll note that there were only 116 contracts signed in March 2020 - which is a drop off from the 132 contracts signed last March. However, when looking at the entire first quarter (Jan-Mar) this year's buyers have been a group of 320, while only 308 buyers showed up last year during the same timeframe. Last year, April was the strongest month of buyer activity -- as measured by when buyers are signing contracts -- and it will be interesting to see if that proves to be true this year. ![]() Changes in housing inventory (the number of homes on the market for sale) were somewhat predictable over the past month. We usually see inventory levels starting to climb in March (we did this year) but we also saw an overall year-over-year decline in inventory levels, as we have been seeing for the past few years. This will be another good indicator to watch in the coming months to see how the number of homes on the market is affected by COVID-19. ![]() If you're buying a home right now -- or refinancing your mortgage -- you are likely quite pleased with some super-low interest rates. The current average rate for a 30 year fixed rate mortgage (on a purchase, not a re-fi) is 3.5%. This creates an extraordinary opportunity for today's buyers to lock in their housing costs at a low level as it relates to the interest they are paying on their mortgage. ![]() Any changes to this chart above will be telling in the coming months. We only have unemployment data through February right now, and at that point, things were looking great! This could change quite a bit moving forward. That is all of the graphs I'll throw at you today. In conclusion, through the end of March, our local housing market was continuing to move right along at a steady clip. Plenty of sellers are still listing their homes for sale. Plenty of buyers are still contracting to buy homes. Here are a few other articles that I have written over the past few weeks that explore some of the nuances of our market... As we continue through this unprecedented time, I'll continue to monitor where we are and contemplate where we might be headed, and I'll share them with you in my monthly market reports. Until next month, I hope you and your family remain healthy, and if you have questions about how current market dynamics might impact your plans for potentially buying or selling a home this year, feel free to reach out by sending me an email - scott@hhtdy.com. | |
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2020 Home Buying Activity Might Be Starting To Slow Slightly But Still Ahead of 2018, 2019 |
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![]() While out for a run earlier this week, listening to a podcast about the news and current events related to COVID-19, one of the people on the podcast made a comment that resonated with me. He said that whenever someone asks him how he thinks COVID-19 is going to affect ____ (fill in the blank with whatever you'd like) he starts by asking them how long they think COVID-19 will still be impacting our daily lives. The same likely holds true as it relates to the local housing market. How will COVID-19 affect home prices (or the pace of home sales) in Harrisonburg and Rockingham County? Well, it likely depends on how long you think COVID-19 will continue to impact our daily lives. Consider these three scenarios from a timeline perspective...
These three different timelines would likely result in very different impacts on our local housing market. But since none of us really know how the future timeline is going to play out, we can't accurately predict if or how the local housing market will be impacted by COVID-19. What we can do, however, is look backwards to see what impact we can observe as time passes. All that to say -- the graph multiple paragraphs above where you're reading now shows the cumulative number of buyers who signed contracts during the first four months of this year as compared to 2018 and 2019. As you'll note, this year started off much stronger than 2018 and 2019 - but over the past few weeks, cumulative buyer activity has been slowing back down slightly, now approaching the 2019 trajectory. Don't read that as all bad news, though, as thus far in 2020 we have still seen more buyers sign contracts than during the same timeframe in 2019, despite COVID-19. And two possibly necessary notes to make sure you understand this data:
As we continue through this unprecedented time, I'll continue to monitor where we are and contemplate where we might be headed, and I'll share it with you here. If you have questions about how all of this relates to your plans for potentially buying or selling a home, feel free to reach out by sending me an email - scott@hhtdy.com. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
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